The reform of vertical arrangements of tax administrative agencies in China

The decentralized tax administration has been in place for over two decades in China since 1994. In March this year, National People’s Congress of China reviewed and approved the State Council Institutions Reform Plan and decided “we will reform the tax administrative system by merging the tax administrations on state and sub-national levels and assume it both tax and non-tax revenue administrative responsibility in the corresponding jurisdictions”. The article aims to explain to readers that China’s tax authorities have to a large extent absorbed common international practices and general experience. The history of the vertical arrangements of China’s tax administration is revisited through descriptive and comparative analysis. The reasons for the cancellation of the sub-national tax bureaus in China are analyzed followed by the international experience of the vertical structure of the tax administration. It is contended in the article that the reform of the vertical arrangements of the tax authorities is an attempt to deepen the reform of the fiscal system and promoting tax administrative agencies reform in the broad sense from the perspective of the modernization of the state governance system and governance abilities. The article concludes with a summary of several features of this reform